Christopher Luxon, Nicola Willis urge fuel importers to 'do the right thing' after Iran peace deal

30 minutes ago

The government has welcomed news of a deal between the United States and Iran but warns it may not mean cheaper fuel just yet.

The deal - unveiled by mediator Pakistan and confirmed by Washington and Tehran on Monday - includes an immediate end to military operations, including in Lebanon.

It prompted US President Donald Trump to declare the Strait of Hormuz open, saying "I hereby fully authorise the toll-free opening of the Strait of Hormuz and ... immediate removal of the United States Naval blockade".

"Ships of the World, start your engines. Let the oil flow!"

Prime Minister Christopher Luxon - fronting the weekly post-Cabinet media briefing alongside Finance Minister Nicola Willis on Monday afternoon - said he welcomed the announcement.

"Obviously, it remains an incredibly fragile situation, but this news gives us the best hope of peace since the conflict began three and a half months ago."

He said the impacts on the Strait of Hormuz would continue to be felt for some time, but noted the New Zealand economy had held up "relatively" well despite the conflict.

Prime Minister Christopher Luxon.

Photo: RNZ / Samuel Rillstone

"Food and fibre export revenue is forecast to reach $64.3 billion this year to the end of June, that's up 6 percent over last year ... exports are strong - they're up 9 percent, they've grown a record $10b this year, and are up $20b since we came to government ... and for the first time in five years, New Zealand now has a trade surplus, and in April we had a record monthly trade surplus of $2b."

Willis said the price at the pump of 91 octane and diesel were up 25 percent and 58 percent respectively since the war began, while Brent crude oil was at its lowest price since 10 March.

However, she warned New Zealanders not to assume this would mean cheaper fuel in the short term.

"This is not the first time we have had news of a breakthrough. It is too soon to call a sustained fall in fuel prices," she said.

"That is what we want to see, but we accept that there could be events in the coming days and weeks that change the projections for oil prices, so we will hope for the best, but continue to prepare for less favourable outcomes."

Asked when New Zealanders might expect to be free of the economic effects of the conflict, Luxon said it would be "some time" but the government was expecting a delay of three or four weeks before prices started to fall.

"There's production that needs to be turned on in the Middle East, there's storage and that needs to be delivered and managed and then obviously ships out into our refiners - so I think it will be some time."

Nicola Willis.

Photo: RNZ / Samuel Rillstone

Willis said the government expected to see prices fall at the pump, and the Commerce Commission was monitoring the situation closely.

"What they say is that the petrol companies price in how much it will take them to replace the fuel in their storage tanks ... and that that is reflected in the price you pay at the pump."

Luxon backed that, saying the government had seen no evidence of price gouging but the Commission would be watching.

"To any oil executive listening to this press conference, we're pretty clear we expect them to do the right thing ... we're very comfortable with what the oil companies have been doing, we haven't seen any evidence of any gouging, any of those sorts of issues that have been observed in other places.

"We've had a good relationship with the oil importers. We expect that to continue. We understand when prices go up, they need to raise them - but also when prices come down, they need to lower them too."

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